Delaware
(State
or other jurisdiction
of
incorporation or organization)
|
41-0518430
(I.R.S.
Employer
Identification
No.)
|
1776
Lincoln Street, Suite 700, Denver, Colorado
(Address
of principal executive offices)
|
80203
(Zip
Code)
|
Large
accelerated filer þ
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
Part
I.
|
FINANCIAL
INFORMATION
|
PAGE
|
|
|
|||
Item
1.
|
Financial
Statements (Unaudited)
|
||
Consolidated
Balance Sheets
March
31, 2009, and December 31, 2008
|
3 | ||
Consolidated
Statements of Operations
Three
Months Ended March 31, 2009, and 2008
|
4 | ||
Consolidated
Statements of Stockholders’ Equity
and
Comprehensive Income (Loss)
March
31, 2009, and December 31, 2008
|
5 | ||
Consolidated
Statements of Cash Flows
Three
Months Ended March 31, 2009, and 2008
|
6 | ||
Notes
to Consolidated Financial Statements
March
31, 2009
|
8 | ||
Item
2.
|
Management’s
Discussion and Analysis of Financial
Condition
and Results of Operations
|
25 | |
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
(included
within the content of Item 2)
|
50 | |
Item
4.
|
Controls
and Procedures
|
50 | |
Part
II.
|
OTHER
INFORMATION
|
||
Item
1A.
|
Risk
Factors
|
50 | |
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
50 | |
Item
6.
|
Exhibits
|
52 |
PART
I. FINANCIAL INFORMATION
|
||||||
ITEM
1. FINANCIAL STATEMENTS
|
||||||
ST.
MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
|
||||||
CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
|
||||||
(In
thousands, except share amounts)
|
||||||
March
31,
|
December
31,
|
|||||
|
2009
|
2008
|
||||
ASSETS
|
(As
adjusted, Note 7)
|
|||||
Current
assets:
|
||||||
Cash
and cash equivalents
|
$ | 2,211 | $ | 6,131 | ||
Short-term
investments
|
1,010 | 1,002 | ||||
Accounts
receivable, net of allowance for doubtful accounts
|
||||||
of
$16,991 in 2009 and $16,788 in 2008
|
113,779 | 157,690 | ||||
Refundable
income taxes
|
- | 13,161 | ||||
Prepaid
expenses and other
|
22,930 | 22,161 | ||||
Accrued
derivative asset
|
119,111 | 111,649 | ||||
Total
current assets
|
259,041 | 311,794 | ||||
Property
and equipment (successful efforts method), at cost:
|
||||||
Land
|
1,350 | 1,350 | ||||
Proved
oil and gas properties
|
2,941,940 | 2,969,722 | ||||
Less
- accumulated depletion, depreciation, and amortization
|
(1,029,858 | ) | (947,207 | ) | ||
Unproved
oil and gas properties, net of impairment allowance
|
||||||
of
$43,069 in 2009 and $42,945 in 2008
|
167,905 | 170,644 | ||||
Wells
in progress
|
54,657 | 90,910 | ||||
Materials
inventory, at lower of cost or market
|
36,759 | 40,455 | ||||
Other
property and equipment, net of accumulated depreciation
|
||||||
of
$14,676 in 2009 and $13,848 in 2008
|
13,442 | 13,458 | ||||
2,186,195 | 2,339,332 | |||||
Other
noncurrent assets:
|
||||||
Accrued
derivative asset
|
24,246 | 21,541 | ||||
Restricted
cash subject to Section 1031 Exchange
|
10,050 | 14,398 | ||||
Other
noncurrent assets
|
9,649 | 10,182 | ||||
Total
other noncurrent assets
|
43,945 | 46,121 | ||||
Total
Assets
|
$ | 2,489,181 | $ | 2,697,247 | ||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||
Current
liabilities:
|
||||||
Accounts
payable and accrued expenses
|
$ | 201,282 | $ | 254,811 | ||
Accrued
derivative liability
|
1,247 | 501 | ||||
Deferred
income taxes
|
42,210 | 41,289 | ||||
Total
current liabilities
|
244,739 | 296,601 | ||||
Noncurrent
liabilities:
|
||||||
Long-term
credit facility
|
299,000 | 300,000 | ||||
Senior
convertible notes, net of unamortized
|
||||||
discount
of $26,695 in 2009, and $28,787 in 2008
|
260,805 | 258,713 | ||||
Asset
retirement obligation
|
109,653 | 108,993 | ||||
Net
Profits Plan liability
|
154,075 | 177,366 | ||||
Deferred
income taxes
|
305,471 | 354,328 | ||||
Accrued
derivative liability
|
18,832 | 27,419 | ||||
Other
noncurrent liabilities
|
11,730 | 11,318 | ||||
Total
noncurrent liabilities
|
1,159,566 | 1,238,137 | ||||
Commitments
and contingencies
|
||||||
Stockholders'
equity:
|
||||||
Common
stock, $0.01 par value: authorized - 200,000,000
shares;
|
||||||
issued: 62,567,962
shares in 2009 and 62,465,572 shares in 2008;
|
||||||
outstanding,
net of treasury shares: 62,390,975 shares in 2009
|
||||||
and
62,288,585 shares in 2008
|
626 | 625 | ||||
Additional
paid-in capital
|
141,872 | 141,283 | ||||
Treasury
stock, at cost: 176,987 shares in 2009 and 2008
|
(1,773 | ) | (1,892 | ) | ||
Retained
earnings
|
866,457 | 957,200 | ||||
Accumulated
other comprehensive income
|
77,694 | 65,293 | ||||
Total
stockholders' equity
|
1,084,876 | 1,162,509 | ||||
Total
Liabilities and Stockholders' Equity
|
$ | 2,489,181 | $ | 2,697,247 |
ST.
MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
|
||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
||||||
(In
thousands, except per share amounts)
|
||||||
For
the Three Months
|
||||||
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(As
adjusted, Note 7)
|
||||||
Operating
revenues and other income:
|
||||||
Oil
and gas production revenue
|
$ | 130,417 | $ | 310,432 | ||
Realized
oil and gas hedge gain (loss)
|
55,620 | (23,950 | ) | |||
Gain
(loss) on sale of proved properties
|
(599 | ) | 56,017 | |||
Marketed
gas system and other operating revenue
|
13,782 | 19,603 | ||||
Total
operating revenues and other income
|
199,220 | 362,102 | ||||
Operating
expenses:
|
||||||
Oil
and gas production expense
|
55,829 | 59,476 | ||||
Depletion,
depreciation, amortization,
|
||||||
and
asset retirement obligation liability accretion
|
91,712 | 70,354 | ||||
Exploration
|
13,598 | 14,308 | ||||
Impairment
of proved properties
|
147,049 | - | ||||
Abandonment
and impairment of unproved properties
|
3,902 | 1,008 | ||||
Impairment
of materials inventory
|
8,616 | - | ||||
General
and administrative
|
16,399 | 21,128 | ||||
Change
in Net Profits Plan liability
|
(23,291 | ) | 13,626 | |||
Marketed
gas system expense
|
13,383 | 17,745 | ||||
Unrealized
derivative loss
|
1,846 | 6,417 | ||||
Other
expense
|
5,642 | 700 | ||||
Total
operating expenses
|
334,685 | 204,762 | ||||
Income
(loss) from operations
|
(135,465 | ) | 157,340 | |||
Nonoperating
income (expense):
|
||||||
Interest
income
|
22 | 97 | ||||
Interest
expense
|
(6,096 | ) | (6,593 | ) | ||
Income
(loss) before income taxes
|
(141,539 | ) | 150,844 | |||
Income
tax benefit (expense)
|
53,916 | (55,870 | ) | |||
Net
income (loss)
|
$ | (87,623 | ) | $ | 94,974 | |
Basic
weighted-average common shares outstanding
|
62,335 | 62,861 | ||||
Diluted
weighted-average common shares outstanding
|
62,335 | 64,045 | ||||
Basic
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.51 | |
Diluted
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.48 |
ST.
MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
|
||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
||||||||||||||||||||||
(In
thousands, except share amounts)
|
||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||
Common
Stock
|
Paid-in
|
Treasury
Stock
|
Retained
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Shares
|
Amount
|
Earnings
|
Income
(Loss)
|
Equity
|
|||||||||||||||
Balances,
December 31, 2007 (As adjusted, Note 7)
|
64,010,832 | $ | 640 | $ | 211,913 | (1,009,712 | ) | $ | (29,049 | ) | $ | 876,038 | $ | (156,968 | ) | $ | 902,574 | |||||
Comprehensive
income, net of tax:
|
||||||||||||||||||||||
Net income (As adjusted, Note 7)
|
- | - | - | - | - | 87,348 | - | 87,348 | ||||||||||||||
Change in derivative instrument fair value
|
- | - | - | - | - | - | 177,005 | 177,005 | ||||||||||||||
Reclassification to earnings
|
- | - | - | - | - | - | 46,463 | 46,463 | ||||||||||||||
Minimum pension liability adjustment
|
- | - | - | - | - | - | (1,207 | ) | (1,207 | ) | ||||||||||||
Total
comprehensive income
|
309,609 | |||||||||||||||||||||
Cash
dividends, $ 0.10 per share
|
- | - | - | - | - | (6,186 | ) | - | (6,186 | ) | ||||||||||||
Treasury
stock purchases
|
- | - | - | (2,135,600 | ) | (77,150 | ) | - | - | (77,150 | ) | |||||||||||
Retirement
of treasury stock
|
(2,945,212 | ) | (29 | ) | (103,237 | ) | 2,945,212 | 103,266 | - | - | - | |||||||||||
Issuance
of common stock under Employee
|
||||||||||||||||||||||
Stock Purchase Plan
|
45,228 | - | 1,055 | - | - | - | - | 1,055 | ||||||||||||||
Issuance
of common stock upon settlement of
|
||||||||||||||||||||||
RSUs following expiration of restriction period,
|
||||||||||||||||||||||
net of shares used for tax withholdings
|
482,602 | 5 | (6,910 | ) | - | - | - | - | (6,905 | ) | ||||||||||||
Sale
of common stock, including income
|
||||||||||||||||||||||
tax benefit of stock option exercises
|
868,372 | 9 | 24,691 | - | - | - | - | 24,700 | ||||||||||||||
Stock-based
compensation expense
|
3,750 | - | 13,771 | 23,113 | 1,041 | - | - | 14,812 | ||||||||||||||
Balances,
December 31, 2008 (As adjusted, Note 7)
|
62,465,572 | $ | 625 | $ | 141,283 | (176,987 | ) | $ | (1,892 | ) | $ | 957,200 | $ | 65,293 | $ | 1,162,509 | ||||||
Comprehensive
income (loss), net of tax:
|
||||||||||||||||||||||
Net loss
|
- | - | - | - | - | (87,623 | ) | - | (87,623 | ) | ||||||||||||
Change in derivative instrument fair value
|
- | - | - | - | - | - | (14,148 | ) | (14,148 | ) | ||||||||||||
Reclassification to earnings
|
- | - | - | - | - | - | 26,550 | 26,550 | ||||||||||||||
Minimum pension liability adjustment
|
- | - | - | - | - | - | (1 | ) | (1 | ) | ||||||||||||
Total
comprehensive loss
|
(75,222 | ) | ||||||||||||||||||||
Cash
dividends, $ 0.05 per share
|
- | - | - | - | - | (3,120 | ) | - | (3,120 | ) | ||||||||||||
Issuance
of common stock upon settlement of
|
||||||||||||||||||||||
RSUs following expiration of restriction period,
|
||||||||||||||||||||||
net of shares used for tax withholdings,
|
||||||||||||||||||||||
including
income tax cost of RSUs
|
85,638 | 1 | (3,240 | ) | - | - | - | - | (3,239 | ) | ||||||||||||
Sale
of common stock, including income
|
||||||||||||||||||||||
tax benefit of stock option exercises
|
15,502 | - | 172 | - | - | - | - | 172 | ||||||||||||||
Stock-based
compensation expense
|
1,250 | - | 3,657 | - | 119 | - | - | 3,776 | ||||||||||||||
Balances,
March 31, 2009
|
62,567,962 | $ | 626 | $ | 141,872 | (176,987 | ) | $ | (1,773 | ) | $ | 866,457 | $ | 77,694 | $ | 1,084,876 |
ST.
MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
|
||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
||||||
(In
thousands)
|
||||||
For
the Three Months
|
||||||
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(As
adjusted, Note 7)
|
||||||
Cash
flows from operating activities:
|
||||||
Reconciliation
of net income (loss) to net cash provided
|
||||||
by
operating activities:
|
||||||
Net
income (loss)
|
$ | (87,623 | ) | $ | 94,974 | |
Adjustments
to reconcile net income (loss) to net cash
|
||||||
provided
by operating activities:
|
||||||
(Gain)
loss on sale of proved properties
|
599 | (56,017 | ) | |||
Depletion,
depreciation, amortization,
|
||||||
and
asset retirement obligation liability accretion
|
91,712 | 70,354 | ||||
Exploratory
dry hole expense
|
94 | 690 | ||||
Impairment
of proved properties
|
147,049 | - | ||||
Abandonment
and impairment of unproved properties
|
3,902 | 1,008 | ||||
Impairment
of materials inventory
|
8,616 | - | ||||
Stock-based
compensation expense*
|
3,776 | 3,310 | ||||
Change
in Net Profits Plan liability
|
(23,291 | ) | 13,626 | |||
Unrealized
derivative loss
|
1,846 | 6,417 | ||||
Loss
related to hurricanes
|
2,093 | - | ||||
Deferred
income taxes
|
(55,390 | ) | 49,489 | |||
Amortization
of debt discount
|
2,092 | 1,846 | ||||
Other
|
(829 | ) | 3,627 | |||
Changes
in current assets and liabilities:
|
||||||
Accounts
receivable
|
43,703 | (41,236 | ) | |||
Refundable
income taxes
|
13,161 | 933 | ||||
Prepaid
expenses and other
|
(5,414 | ) | (336 | ) | ||
Accounts
payable and accrued expenses
|
(20,921 | ) | (5,142 | ) | ||
Excess
income tax benefit from the exercise of stock options
|
- | (860 | ) | |||
Net
cash provided by operating activities
|
125,175 | 142,683 | ||||
Cash
flows from investing activities:
|
||||||
Proceeds
from sale of oil and gas properties
|
1,063 | 130,400 | ||||
Capital
expenditures
|
(133,625 | ) | (161,530 | ) | ||
Acquisition
of oil and gas properties
|
(53 | ) | (53,031 | ) | ||
Receipts
from restricted cash
|
4,348 | - | ||||
Other
|
- | (10,007 | ) | |||
Net
cash used in investing activities
|
(128,267 | ) | (94,168 | ) | ||
Cash
flows from financing activities:
|
||||||
Proceeds
from credit facility
|
1,190,000 | 389,000 | ||||
Repayment
of credit facility
|
(1,191,000 | ) | (397,500 | ) | ||
Excess
income tax benefit from the exercise of stock options
|
- | 860 | ||||
Proceeds
from sale of common stock
|
172 | 328 | ||||
Repurchase
of common stock
|
- | (77,202 | ) | |||
Net
cash used in financing activities
|
(828 | ) | (84,514 | ) | ||
Net
change in cash and cash equivalents
|
(3,920 | ) | (35,999 | ) | ||
Cash
and cash equivalents at beginning of period
|
6,131 | 43,510 | ||||
Cash
and cash equivalents at end of period
|
$ | 2,211 | $ | 7,511 | ||
*
Stock-based compensation expense is a component of exploration expense and
general and administrative expense on
|
||||||
the
consolidated statements of operations. For the three months ended
March 31, 2009, and 2008, respectively,
|
||||||
approximately
$1.6 million and $1.1 million of stock-based compensation expense was
included in exploration expense. For
|
||||||
both
the three months ended March 31, 2009, and 2008, approximately $2.2
million of stock-based compensation expense
|
||||||
was
included in general and administrative expense.
|
ST.
MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
|
||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
|
||||||
Supplemental
schedule of additional cash flow information and noncash investing and
financing activities:
|
||||||
For
the Three Months
|
||||||
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
Cash
paid for interest
|
$ | 1,509 | $ | 3,616 | ||
Cash
paid or (refunded) for income taxes
|
$ | (10,907 | ) | $ | 2,081 | |
For
the period ended March 31, 2008, the Company issued 158,744, restricted
stock units
|
||||||
to
employees as equity-based compensation, pursuant to the Company's
2006
|
||||||
Equity
Incentive Compensation Plan. The total fair value of this issuance
was $6.0 million.
|
||||||
There
were no restricted stock units issued to employees for the period ended
March 31, 2009.
|
||||||
As
of March 31, 2009, and 2008, $76.4 million, and $132.8 million,
respectively, are included as
|
||||||
additions
to oil and gas properties and accounts payable and accrued
expenses. These oil and gas property
|
||||||
additions
are reflected in cash used in investing activities in the periods that the
payables are
settled.
|
|
For
the Three Months
Ended
March 31,
|
|||||
2009
|
2008
|
|||||
(In
thousands, except per share amounts)
|
||||||
Net
income (loss)
|
$ | (87,623 | ) | $ | 94,974 | |
Basic
weighted-average common stock outstanding
|
62,335 | 62,861 | ||||
Add:
dilutive effect of stock options, unvested RSUs, and PSAs
|
- | 1,184 | ||||
Add:
dilutive effect of 3.50% senior convertible notes
|
- | - | ||||
Diluted
weighted-average common shares outstanding
|
62,335 | 64,045 | ||||
Basic
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.51 | |
Diluted
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.48 |
PSAs
|
Weighted-Average
Grant-Date Fair Value
|
||||
Non-vested,
at January 1, 2009
|
464,333 | $ | 26.48 | ||
Granted
|
- | $ | - | ||
Vested
|
- | $ | - | ||
Forfeited
|
(16,539 | ) | $ | 26.48 | |
Non-vested,
at March 31, 2009
|
447,794 | $ | 26.48 |
RSUs
|
Weighted-Average
Grant-Date Fair Value
|
||||
Non-vested,
at January 1, 2009
|
402,297 | $ | 48.24 | ||
Granted
|
- | $ | - | ||
Vested
|
(118,018 | ) | $ | 34.64 | |
Forfeited
|
(10,984 | ) | $ | 53.39 | |
Non-vested,
at March 31, 2009
|
273,295 | $ | 53.75 |
Options
|
Weighted-Average
Exercise
Price
|
Weighted-Average
Remaining Contractual Term
(In
years)
|
Aggregate
Intrinsic Value
(In
thousands)
|
|||||||
Outstanding,
January 1, 2009
|
1,509,710 | $ | 12.69 | |||||||
Exercised
|
(15,502 | ) | $ | 11.21 | ||||||
Forfeited
|
- | $ | - | |||||||
Outstanding,
March 31, 2009
|
1,494,208 | $ | 12.71 | 3.44 | $ | 2,027 | ||||
Vested,
or expect to vest, end of period
|
1,494,208 | $ | 12.71 | 3.44 | $ | 2,027 | ||||
Exercisable,
end of period
|
1,494,208 | $ | 12.71 | 3.44 | $ | 2,027 |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
General
and administrative expense (benefit)
|
$ | (20,694 | ) | $ | 12,247 | |
Exploration
expense (benefit)
|
(2,597 | ) | 1,379 | |||
Total
|
$ | (23,291 | ) | $ | 13,626 |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
Current
portion of income tax expense:
|
||||||
Federal
|
$ | 1,083 | $ | 5,881 | ||
State
|
390 | 500 | ||||
Deferred
portion of income tax expense (benefit):
|
(55,389 | ) | 49,489 | |||
Total
income tax expense (benefit)
|
$ | (53,916 | ) | $ | 55,870 | |
Effective
tax rates
|
38.1 | % | 37.0 | % |
Borrowing
Base Utilization Grid
|
||||
Borrowing
Base Utilization Percentage
|
<25%
|
>25% <50%
|
>50% <75%
|
>75%
|
Eurodollar
Loans
|
2.000%
|
2.250%
|
2.500%
|
2.750%
|
ABR
Loans or Swingline Loans
|
1.000%
|
1.250%
|
1.500%
|
1.750%
|
Commitment
Fee Rate
|
0.500%
|
0.500%
|
0.500%
|
0.500%
|
December
31, 2008
|
||||||
As
Adjusted
|
As
Originally
Reported
|
|||||
(In
thousands)
|
||||||
Proved
oil and gas properties
|
$ | 2,969,722 | $ | 2,967,491 | ||
3.50%
Senior Convertible Notes
|
258,713 | 287,500 | ||||
Deferred
income taxes
|
354,328 | 358,334 | ||||
Additional
paid-in capital
|
141,283 | 99,440 | ||||
Retained
earnings
|
957,200 | 964,019 |
As
of
March
31, 2009
|
As
of
December
31, 2008
(Adjusted)
|
|||||
(In
thousands)
|
||||||
3.50%
Senior Convertible Notes
|
$ | 287,500 | $ | 287,500 | ||
Unamortized
debt discount
|
(26,695 | ) | (28,787 | ) | ||
Net
carrying amount of the 3.50% Senior Convertible Notes
|
$ | 260,805 | $ | 258,713 |
For
the Three Months Ended
March
31, 2008
|
|||||||
As
Adjusted
|
As
Originally Reported
|
||||||
(In
thousands except per share amounts)
|
|||||||
Interest
expense
|
$ | 6,593 | $ | 4,971 | |||
Income
tax expense
|
55,870 | 56,470 | |||||
Net
income
|
94,974 | 95,996 | |||||
Basic
net income per common share
|
$ | 1.51 | $ | 1.53 | |||
Diluted
net income per common share
|
$ | 1.48 | $ | 1.50 |
Location
on Consolidated Balance Sheets
|
Fair
Value
at
March 31, 2009
|
||||
(In
thousands)
|
|||||
Derivative
assets designated as cash flow hedges:
|
|
||||
Oil,
natural gas, and NGL commodity
|
Current
assets
|
$ | 119,111 | ||
Oil,
natural gas, and NGL commodity
|
Other
noncurrent assets
|
24,246 | |||
Total
derivative assets designated as cash flow hedges under SFAS No.
133
|
$ | 143,357 |
Derivative
liabilities designated as cash flow hedges:
|
|||||
Oil,
natural gas, and NGL commodity
|
Current
liabilities
|
$ | (1,247 | ) | |
Oil,
natural gas, and NGL commodity
|
Other
noncurrent liabilities
|
(18,832 | ) | ||
Total
derivative liabilities designated as cash flow hedges under SFAS No.
133
|
$ | (20,079 | ) |
Derivatives
Qualifying as Cash Flow Hedges
|
Amount
of Gain Recognized in OCI on Derivatives (Effective
Portion)
|
Location
of Gain Reclassified from AOCI to Income (Effective
Portion)
|
Amount
of Gain Reclassified from AOCI to Income
(Effective
Portion)
|
||||||
(In
thousands)
|
(In
thousands)
|
||||||||
|
|
||||||||
Commodity
hedges
|
$ | 80,461 |
Realized
oil and gas hedge gain (loss)
|
$ | 26,550 |
Derivatives
Qualifying as Cash Flow Hedges
|
Location
of Loss Reclassified from AOCI to Income (Ineffective
Portion)
|
Amount
of Loss Reclassified from AOCI to Income (Ineffective
Portion)
|
||||
(In
thousands)
|
||||||
|
||||||
Commodity
hedges
|
Unrealized
derivative loss
|
$ | 1,846 |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
Service
cost
|
$ | 625 | $ | 460 | ||
Interest
cost
|
234 | 222 | ||||
Expected
return on plan assets
|
(108 | ) | (168 | ) | ||
Amortization
of net actuarial loss
|
93 | 40 | ||||
Net
Periodic benefit cost
|
$ | 844 | $ | 554 |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
Beginning
asset retirement obligation
|
$ | 116,274 | $ | 108,284 | ||
Liabilities
incurred
|
356 | 4,029 | ||||
Liabilities
settled
|
(3,006 | ) | (10,597 | ) | ||
Accretion
expense
|
2,301 | 1,665 | ||||
Revision
to estimated cash flow
|
2,093 | 600 | ||||
Ending
asset retirement obligation
|
$ | 118,018 | $ | 103,981 |
●
|
Level
1 – Quoted prices in active markets for identical assets or
liabilities
|
●
|
Level
2 – Quoted prices in active markets for similar assets and liabilities,
quoted prices for identical or similar instruments in markets that are not
active, and model-derived valuations whose inputs are observable or whose
significant value drivers are
observable
|
●
|
Level
3 – Significant inputs to the valuation model are
unobservable
|
Level
1
|
Level
2
|
Level
3
|
|||||||
(In
thousands)
|
|||||||||
Assets:
|
|||||||||
Accrued
derivative(a)
|
$ | - | $ | 143,357 | $ | - | |||
Proved
oil and gas properties(b)
|
$ | - | $ | - | $ | 140,019 | |||
Liabilities:
|
|||||||||
Accrued
derivative(a)
|
$ | - | $ | 20,079 | $ | - | |||
Net
Profits Plan(a)
|
$ | - | $ | - | $ | 154,075 |
(a)
|
This
represents a financial asset or liability that is measured at fair value
on a recurring basis.
|
(b)
|
This
represents a nonfinancial asset or liability that is measured at fair
value on a nonrecurring basis effective January 1,
2009.
|
Level
1
|
Level
2
|
Level
3
|
|||||||
(In
thousands)
|
|||||||||
Assets:
|
|||||||||
Accrued
derivative
|
$ | - | $ | 133,190 | $ | - | |||
Liabilities:
|
|||||||||
Accrued
derivative
|
$ | - | $ | 27,920 | $ | - | |||
Net
Profits Plan
|
$ | - | $ | - | $ | 177,366 |
For
the Three Months
Ended
March 31, 2009
|
|||
(In
thousands)
|
|||
Beginning
balance
|
$ | 177,366 | |
Net
decrease in liability(a)
|
(19,653 | ) | |
Net
settlements (a)(b)
|
(3,638 | ) | |
Transfers
in (out) of Level 3
|
- | ||
Ending
balance
|
$ | 154,075 |
(a)
|
Net
changes in the Net Profits Plan liability are shown in the Change in Net
Profits Plan liability line item of the accompanying consolidated
statements of operations.
|
(b)
|
Settlements
represent cash payments made or accrued under the Net Profits
Plan.
|
●
|
Acquire
significant leasehold positions in new and emerging resource
plays
|
●
|
Leverage
our core competencies in drilling and completions, as well as
acquisitions
|
●
|
Exploit
our significant legacy asset production and optimize our asset base
through divestitures of non-core assets when
appropriate
|
●
|
Maintain
a strong balance sheet while funding the growth of the
enterprise
|
For
the Three Months Ended
|
|||||||||
March
31, 2009
|
December
31, 2008
|
March
31, 2008
|
|||||||
Crude Oil (per Bbl):
|
|||||||||
Average
NYMEX price
|
$ | 43.08 | $ | 58.74 | $ | 97.90 | |||
Realized
price, before the effects of hedging
|
$ | 34.40 | $ | 50.17 | $ | 92.33 | |||
Net
realized price, including the effects of hedging
|
$ | 44.16 | $ | 55.63 | $ | 76.24 | |||
Natural Gas (per Mcf):
|
|||||||||
Average
NYMEX price
|
$ | 4.86 | $ | 6.82 | $ | 8.07 | |||
Realized
price, before the effects of hedging
|
$ | 4.00 | $ | 5.30 | $ | 8.53 | |||
Net
realized price, including the effects of hedging
|
$ | 6.14 | $ | 7.09 | $ | 8.69 |
For
the Three Months Ended
|
||||||||||||
March
31,
|
December
31,
|
September
30,
|
June
30,
|
|||||||||
2009
|
2008
|
2008
|
2008
|
|||||||||
(In
millions, except production sales data)
|
||||||||||||
Production
(BCFE)
|
28.4 | 30.0 | 27.7 | 28.6 | ||||||||
Oil
and gas production revenue, excluding the effects of
hedging
|
$ | 130.4 | $ | 190.5 | $ | 358.5 | $ | 400.0 | ||||
Realized
oil and gas hedge gain (loss)
|
$ | 55.6 | $ | 44.8 | $ | (53.5 | ) | $ | (68.4 | ) | ||
Lease
operating expense
|
$ | 41.2 | $ | 47.7 | $ | 43.6 | $ | 41.0 | ||||
Transportation
costs
|
$ | 5.5 | $ | 6.1 | $ | 6.6 | $ | 5.6 | ||||
Production
taxes
|
$ | 9.1 | $ | 11.8 | $ | 22.5 | $ | 27.0 | ||||
DD&A
|
$ | 91.7 | $ | 95.1 | $ | 72.4 | $ | 76.4 | ||||
Exploration
|
$ | 13.6 | $ | 17.7 | $ | 10.7 | $ | 17.4 | ||||
Impairment
of proved properties
|
$ | 147.0 | $ | 292.1 | $ | 0.5 | $ | 9.6 | ||||
Abandonment
and impairment of unproved properties
|
$ | 3.9 | $ | 34.7 | $ | 1.2 | $ | 2.1 | ||||
Impairment
of goodwill
|
$ | - | $ | 9.5 | $ | - | $ | - | ||||
General
and administrative expense
|
$ | 16.4 | $ | 12.4 | $ | 24.1 | $ | 21.9 | ||||
Bad
debt expense
|
$ | - | $ | - | $ | 6.7 | $ | 9.9 | ||||
Impairment
of materials inventory
|
$ | 8.6 | $ | - | $ | - | $ | - | ||||
Net
income (loss)
|
$ | (87.6 | ) | $ | (127.1 | ) | $ | 87.0 | $ | 32.5 | ||
Percentage change from previous
quarter:
|
||||||||||||
Production
(BCFE)
|
(5)% | 8% | (3)% | 1% | ||||||||
Oil
and gas production revenue, excluding the effects of
hedging
|
(32)% | (47)% | (10)% | 29% | ||||||||
Realized
oil and gas hedge gain (loss)
|
24% | (184)% | (22)% | 185% | ||||||||
Lease
operating expense
|
(14)% | 9% | 6% | 17% | ||||||||
Transportation
costs
|
(10)% | (8)% | 18% | 44% | ||||||||
Production
taxes
|
(23)% | (48)% | (17)% | 32% | ||||||||
DD&A
|
(4)% | 31% | (5)% | 9% | ||||||||
Exploration
|
(23)% | 65% | (39)% | 22% | ||||||||
Impairment
of proved properties
|
(50)% | N/M | (95)% | N/A | ||||||||
Abandonment
and impairment of unproved properties
|
(89)% | N/M | (43)% | 110% | ||||||||
Impairment
of goodwill
|
(100)% | N/A | N/A | N/A | ||||||||
General
and administrative expense
|
32% | (49)% | 10% | 4% | ||||||||
Bad
debt expense
|
N/A | (100)% | (33)% | N/A | ||||||||
Impairment
of materials inventory
|
N/A | N/A | N/A | N/A | ||||||||
Net
income (loss)
|
(31)% | (246)% | 168% | (66)% |
Mid-
Continent
|
ArkLaTex
|
Gulf
Coast
|
Permian
|
Rocky
Mountain
|
Total
(1)
|
|||||||
First
Quarter 2009 Production:
|
||||||||||||
Oil
(MBbl)
|
73.6 | 35.5 | 92.4 | 509.5 | 928.8 | 1,639.8 | ||||||
Gas
(MMcf)
|
8,695.9 | 4,076.5 | 1,936.4 | 986.5 | 2,819.7 | 18,515.1 | ||||||
Equivalent
(MMCFE)
|
9,137.6 | 4,289.8 | 2,490.7 | 4,043.3 | 8,392.3 | 28,353.7 | ||||||
Avg.
Daily Equivalents (MMCFE/d)
|
101.5 | 47.7 | 27.7 | 44.9 | 93.2 | 315.0 | ||||||
Relative
percentage
|
32% | 15% | 9% | 14% | 30% | 100% |
(1)
|
Totals
may not add due to rounding
|
Selected
Operations Data (In thousands, except sales price, volume, and per MCFE
amounts):
|
||||||||
For
the Three Months
Ended
March 31,
|
Percent
Change
Between
Periods
|
|||||||
2009
|
2008
|
|||||||
Net production volumes
|
||||||||
Oil
(MBbl)
|
1,640 | 1,667 | (2)% | |||||
Natural
gas (MMcf)
|
18,515 | 18,342 | 1% | |||||
MMCFE
(6:1)
|
28,354 | 28,347 | -% | |||||
Average daily production
|
||||||||
Oil
(Bbl per day)
|
18,220 | 18,323 | (1)% | |||||
Natural
gas (Mcf per day)
|
205,724 | 201,565 | 2% | |||||
MCFE
per day (6:1)
|
315,041 | 311,503 | 1% | |||||
Oil
& gas production revenues (1)
|
||||||||
Oil
production revenue
|
$ | 72,412 | $ | 127,127 | (43)% | |||
Gas
production revenue
|
113,625 | 159,355 | (29)% | |||||
Total
|
$ | 186,037 | $ | 286,482 | (35)% | |||
Oil & gas production
expense
|
||||||||
Lease
operating expense
|
$ | 41,248 | $ | 35,105 | 17% | |||
Transportation
costs
|
5,459 | 3,877 | 41% | |||||
Production
taxes
|
9,122 | 20,494 | (55)% | |||||
Total
|
$ | 55,829 | $ | 59,476 | (6)% | |||
Average
realized sales price (1)
|
||||||||
Oil
(per Bbl)
|
$ | 44.16 | $ | 76.24 | (42)% | |||
Natural
gas (per Mcf)
|
$ | 6.14 | $ | 8.69 | (29)% | |||
Per MCFE Data:
|
||||||||
Average
net realized price (1)
|
$ | 6.56 | $ | 10.11 | (35)% | |||
Lease
operating expenses
|
(1.45 | ) | (1.24 | ) | 17% | |||
Transportation
costs
|
(0.19 | ) | (0.14 | ) | 36% | |||
Production
taxes
|
(0.32 | ) | (0.72 | ) | (56)% | |||
General
and administrative
|
(0.57 | ) | (0.75 | ) | (24)% | |||
Operating
margin
|
$ | 4.03 | $ | 7.26 | (44)% | |||
Depletion,
depreciation, amortization, and
asset
retirement obligation liability
accretion
|
$ | 3.23 | $ | 2.48 | 30% |
(1)
|
Includes
the effects of hedging activities
|
Financial
Information (In thousands, except per share amounts):
|
||||||||
March
31, 2009
|
December
31, 2008
|
Percent
Change
Between
Periods
|
||||||
Working
capital
|
$ | 14,302 | $ | 15,193 | (6)% | |||
Long-term
debt
|
$ | 559,805 | $ | 558,713 | -% | |||
Stockholders’
equity
|
$ | 1,084,876 | $ | 1,162,509 | (7)% |
For
the Three Months
Ended
March 31,
|
Percent
Change
|
|||||||
2009
|
2008
|
Between
Periods
|
||||||
Basic
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.51 | (193)% | ||
Diluted
net income (loss) per common share
|
$ | (1.41 | ) | $ | 1.48 | (195)% | ||
Basic
weighted-average shares outstanding
|
62,335 | 62,861 | -% | |||||
Diluted
weighted-average shares outstanding
|
62,335 | 64,045 | (3)% |
For
the Three Months
Ended
March 31,
|
Percent
|
||||||||||
2009
|
2008
|
Change
|
Change
|
||||||||
(In
thousands)
|
|||||||||||
Net
cash provided by operating activities
|
$ | 125,175 | $ | 142,683 | $ | (17,508 | ) | (12)% | |||
Net
cash used in investing activities
|
$ | 128,267 | $ | 94,168 | $ | 34,099 | 36% | ||||
Net
cash used in financing activities
|
$ | 828 | $ | 84,514 | $ | (83,686 | ) | (99)% |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
(In
thousands)
|
||||||
Development
costs (1)
|
$ | 73,763 | $ | 156,706 | ||
Exploration
costs
|
21,630 | 32,619 | ||||
Acquisitions
|
||||||
Proved
properties
|
53 | 31,261 | ||||
Unproved
properties – acquisitions of proved properties (2)
|
- | 22,196 | ||||
Unproved
properties - other
|
9,369 | 3,739 | ||||
Total,
including asset retirement obligations (3)
|
$ | 104,815 | $ | 246,521 |
(1)
|
Includes
capitalized interest of $470,000 in 2009 and $1.4 million in
2008.
|
(2)
|
Represents
a portion of the allocated purchase price of unproved properties acquired
as part of the acquisition of proved
properties.
|
(3)
|
Includes
amounts relating to estimated asset retirement obligations of $356,000 in
2009 and $4.0 million in
2008.
|
Oil Swaps
|
||||||||
Contract Period
|
Volumes
|
Weighted-
Average
Contract
Price
|
Fair
Value at
March
31, 2009
Asset/(Liability)
|
|||||
(Bbl)
|
(per
Bbl)
|
(In
thousands)
|
||||||
Second
quarter 2009 -
|
||||||||
NYMEX
WTI
|
401,000 | $ | 71.65 | $ | 7,926 | |||
Third
quarter 2009 -
|
||||||||
NYMEX
WTI
|
389,000 | $ | 71.59 | 6,274 | ||||
Fourth
quarter 2009 -
|
||||||||
NYMEX
WTI
|
369,000 | $ | 71.67 | 4,938 | ||||
2010
|
||||||||
NYMEX
WTI
|
1,239,000 | $ | 66.47 | 4,511 | ||||
2011
|
||||||||
NYMEX
WTI
|
1,032,000 | $ | 65.36 | (1,970 | ) | |||
All
oil swaps
|
3,430,000 | $ | 21,679 |
Oil Collars
|
|||||||||||
Contract Period
|
NYMEX
WTI
Volumes
|
Weighted-
Average
Floor
Price
|
Weighted-
Average
Ceiling
Price
|
Fair
Value at
March
31, 2009
Asset/(Liability)
|
|||||||
(Bbl)
|
(per
Bbl)
|
(per
Bbl)
|
(In
thousands)
|
||||||||
Second
quarter 2009
|
380,500 | $ | 50.00 | $ | 67.31 | $ | 1,001 | ||||
Third
quarter 2009
|
384,500 | $ | 50.00 | $ | 67.31 | 630 | |||||
Fourth
quarter 2009
|
384,500 | $ | 50.00 | $ | 67.31 | 31 | |||||
2010
|
1,367,500 | $ | 50.00 | $ | 64.91 | (5,785 | ) | ||||
2011
|
1,236,000 | $ | 50.00 | $ | 63.70 | (10,719 | ) | ||||
All
oil collars
|
3,753,000 | $ | (14,842 | ) |
Gas Swaps
|
||||||||
Contract Period
|
Volumes
|
Weighted-
Average
Contract
Price
|
Fair
Value at
March
31, 2009
Asset
|
|||||
(MMBtu)
|
(per
MMBtu)
|
(In
thousands)
|
||||||
Second
quarter 2009
|
||||||||
IF
ANR OK
|
570,000 | $ | 7.47 | $ | 2,625 | |||
IF
CIG
|
930,000 | $ | 7.11 | 4,302 | ||||
IF
EL PASO
|
300,000 | $ | 6.64 | 1,127 | ||||
IF
HSC
|
2,700,000 | $ | 8.09 | 11,993 | ||||
IF
NGPL
|
120,000 | $ | 6.63 | 453 | ||||
IF
PEPL
|
1,500,000 | $ | 7.17 | 6,579 | ||||
NYMEX
Henry Hub
|
300,000 | $ | 8.47 | 1,404 | ||||
Third
quarter 2009
|
||||||||
IF
ANR OK
|
100,000 | $ | 7.11 | 355 | ||||
IF
CIG
|
300,000 | $ | 6.64 | 1,122 | ||||
IF
EL PASO
|
300,000 | $ | 6.94 | 1,022 | ||||
IF
HSC
|
2,680,000 | $ | 8.25 | 11,387 | ||||
IF
NGPL
|
100,000 | $ | 6.86 | 330 | ||||
IF
PEPL
|
360,000 | $ | 7.47 | 1,429 | ||||
IF
RELIANT
|
510,000 | $ | 3.84 | 130 | ||||
NYMEX
Henry Hub
|
420,000 | $ | 7.76 | 1,496 | ||||
Fourth
quarter 2009
|
||||||||
IF
ANR OK
|
90,000 | $ | 7.43 | 301 | ||||
IF
CIG
|
150,000 | $ | 7.42 | 578 | ||||
IF
EL PASO
|
300,000 | $ | 7.01 | 937 | ||||
IF
HSC
|
2,620,000 | $ | 8.60 | 10,591 | ||||
IF
NGPL
|
90,000 | $ | 7.14 | 280 | ||||
IF
RELIANT
|
810,000 | $ | 4.34 | 267 | ||||
NYMEX
Henry Hub
|
710,000 | $ | 7.18 | 1,551 | ||||
2010
|
||||||||
IF
ANR OK
|
60,000 | $ | 7.98 | 167 | ||||
IF
EL PASO
|
1,090,000 | $ | 6.79 | 1,688 | ||||
IF
HSC
|
6,080,000 | $ | 8.40 | 17,010 | ||||
IF
NGPL
|
990,000 | $ | 5.51 | 270 | ||||
IF
RELIANT
|
4,200,000 | $ | 5.32 | 506 | ||||
NYMEX
Henry Hub
|
3,750,000 | $ | 7.13 | 4,385 | ||||
2011
|
||||||||
IF
EL PASO
|
880,000 | $ | 6.34 | 488 | ||||
IF
HSC
|
360,000 | $ | 9.01 | 827 | ||||
IF
NGPL
|
480,000 | $ | 5.98 | 9 | ||||
IF
RELIANT
|
1,860,000 | $ | 5.96 | 73 | ||||
NYMEX
Henry Hub
|
2,130,000 | $ | 6.72 | 199 | ||||
All
gas swap contracts
|
37,840,000 | $ | 85,883 |
Gas Collars
|
|||||||||||
Contract Period
|
Volumes
|
Weighted-
Average
Floor
Price
|
Weighted-
Average
Ceiling
Price
|
Fair
Value at
March
31, 2009
Asset/(Liability)
|
|||||||
(MMBtu)
|
(per
MMBtu)
|
(per
MMBtu)
|
(In
thousands)
|
||||||||
Second
quarter 2009
|
|||||||||||
IF
CIG
|
600,000 | $ | 4.75 | $ | 8.82 | $ | 1,364 | ||||
IF
HSC
|
210,000 | $ | 5.57 | $ | 9.49 | 408 | |||||
IF
PEPL
|
1,375,000 | $ | 5.30 | $ | 9.25 | 3,472 | |||||
NYMEX
Henry Hub
|
90,000 | $ | 6.00 | $ | 10.35 | 191 | |||||
Third
quarter 2009
|
|||||||||||
IF
CIG
|
600,000 | $ | 4.75 | $ | 8.82 | 1,135 | |||||
IF
HSC
|
210,000 | $ | 5.57 | $ | 9.49 | 364 | |||||
IF
PEPL
|
1,385,000 | $ | 5.30 | $ | 9.25 | 2,642 | |||||
NYMEX
Henry Hub
|
90,000 | $ | 6.00 | $ | 10.35 | 175 | |||||
Fourth
quarter 2009
|
|||||||||||
IF
CIG
|
600,000 | $ | 4.75 | $ | 8.82 | 889 | |||||
IF
HSC
|
210,000 | $ | 5.57 | $ | 9.49 | 299 | |||||
IF
PEPL
|
1,385,000 | $ | 5.30 | $ | 9.25 | 2,224 | |||||
NYMEX
Henry Hub
|
90,000 | $ | 6.00 | $ | 10.35 | 130 | |||||
2010
|
|||||||||||
IF
CIG
|
2,040,000 | $ | 4.85 | $ | 7.08 | 1,311 | |||||
IF
HSC
|
600,000 | $ | 5.57 | $ | 7.88 | 337 | |||||
IF
PEPL
|
4,945,000 | $ | 5.31 | $ | 7.61 | 3,402 | |||||
NYMEX
Henry Hub
|
240,000 | $ | 6.00 | $ | 8.38 | 154 | |||||
2011
|
|||||||||||
IF
CIG
|
1,800,000 | $ | 5.00 | $ | 6.32 | (11 | ) | ||||
IF
HSC
|
480,000 | $ | 5.57 | $ | 6.77 | (127 | ) | ||||
IF
PEPL
|
4,225,000 | $ | 5.31 | $ | 6.51 | (468 | ) | ||||
NYMEX
Henry Hub
|
120,000 | $ | 6.00 | $ | 7.25 | (20 | ) | ||||
All
gas collars
|
21,295,000 | $ | 17,871 |
Natural Gas Liquid Swaps
|
||||||||
Contract Period |
Volumes
|
Weighted-
Average
Contract
Price
|
Fair
Value at
March
31, 2009
Asset
|
|||||
(Bbls)
|
(per
Bbl)
|
(In
thousands)
|
||||||
Second
quarter 2009
|
262,000 | $ | 41.53 | $ | 4,342 | |||
Third
quarter 2009
|
218,000 | $ | 41.46 | 3,387 | ||||
Fourth
quarter 2009
|
70,000 | $ | 45.95 | 1,363 | ||||
2010
|
140,000 | $ | 49.59 | 3,207 | ||||
2011
|
20,000 | $ | 49.01 | 388 | ||||
All
natural gas liquid swaps
|
710,000 | $ | 12,687 |
Change
Between the
Three
Months Ended
March
31, 2009, and
2008
|
|||
Oil and gas production
revenues
|
|||
Decrease
in oil and gas production revenues,net of hedging (In
thousands)
|
$ |
100,445
|
Oil
|
|||
Net
realized price change per Bbl,
including the effects of
hedging
|
$ | (32.08) | |
Net
realized price percentage change
|
(42)% | ||
Production
change (MBbl)
|
(27) | ||
Production
percentage change
|
(2)% | ||
Natural Gas
|
|||
Net
realized price change per Mcf,
including the effects of
hedging
|
$ | (2.55) | |
Net
realized price percentage change
|
(29)% | ||
Production
change (MMcf)
|
173 | ||
Production
percentage change
|
1% |
For
the Three Months
Ended
March 31,
|
||||
Revenue
|
2009
|
2008
|
||
Oil
|
39%
|
44%
|
||
Natural
gas
|
61%
|
56%
|
||
Production
|
||||
Oil
|
35%
|
35%
|
||
Natural
gas
|
65%
|
65%
|
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
Summary of Exploration
Expense
|
||||||
Geological
and geophysical expenses
|
$ | 4.4 | $ | 1.8 | ||
Exploratory
dry hole expense
|
0.1 | 0.7 | ||||
Overhead
and other expenses
|
9.1 | 11.8 | ||||
Total
|
$ | 13.6 | $ | 14.3 |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
Oil Hedging
|
||||||
Percentage
of oil production hedged (MBbl)
|
48% | 57% | ||||
Oil
volumes hedged (MBbl)
|
788 | 953 | ||||
Increase
(decrease) in oil revenue
|
$ |
16.0
millionn
|
$ |
(26.8
million)
|
||
Average
realized oil price per Bbl before hedging
|
$ | 34.40 | $ | 92.33 | ||
Average
realized oil price per Bbl after hedging
|
$ | 44.16 | $ | 76.24 | ||
Natural Gas Hedging
|
||||||
Percentage
of gas production hedged (MMBtu)
|
48% | 39% | ||||
Natural
gas volumes hedged (MMBtu)
|
$ |
9.4
million
|
$ |
7.5
million
|
||
Increase
in gas revenue
|
$ |
39.6
millionn
|
$ |
2.9
million
|
||
Average
realized gas price per Mcf before hedging
|
$ | 4.00 | $ | 8.53 | ||
Average
realized gas price per Mcf after hedging
|
$ | 6.14 | $ | 8.69 |
Average
Net Daily Production
Added
(Lost)
|
Pre-Hedge
Oil and Gas Revenues Lost
|
Production
Costs Increase (Decrease)
|
||||||
(MMCFE)
|
(In
millions)
|
(In
millions)
|
||||||
Mid-Continent
|
12.1 | $ | 38.4 | $ | (1.7 | ) | ||
ArkLaTex
|
(1.6 | ) | 20.8 | 1.8 | ||||
Gulf
Coast
|
(14.3 | ) | 25.3 | (2.6 | ) | |||
Permian
|
9.5 | 25.5 | 0.5 | |||||
Rocky
Mountain
|
(2.2 | ) | 70.0 | (1.6 | ) | |||
Total
|
3.5 | $ | 180.0 | $ | (3.6 | ) |
For
the Three Months
Ended
March 31,
|
||||||
2009
|
2008
|
|||||
Realized
oil price ($/Bbl)
|
$ | 34.40 | $ | 92.33 | ||
Realized
gas price ($/Mcf)
|
$ | 4.00 | $ | 8.53 | ||
Realized
equivalent price ($/MCFE)
|
$ | 4.60 | $ | 10.95 |
●
|
A
$0.40 decrease in production taxes on a per MCFE basis due to the decrease
in realized prices between periods, particularly in the oil-weighted Rocky
Mountain and Permian Basin regions
|
●
|
A
$0.21 increase in recurring LOE on a per MCFE basis related to higher
costs, particularly in oil-weighted regions, for items such as fuel and
fluid disposal, as well as in the ArkLaTex
region
|
●
|
A
$0.05 increase in overall transportation cost on a per MCFE basis driven
by an increase in additional transportation costs incurred on our
non-operated properties located in the Rocky Mountain
region
|
●
|
Overall
workover LOE on a per MCFE basis was essentially flat from period to
period.
|
●
|
The
amount and nature of future capital expenditures and the availability of
liquidity and capital resources to fund capital
expenditures
|
●
|
The
drilling of wells and other exploration and development activities and
plans, as well as possible future
acquisitions
|
●
|
Reserve
estimates and the estimates of both future net revenues and the present
value of future net revenues that are included in their
calculation
|
●
|
Future
oil and natural gas production
estimates
|
●
|
Our
outlook on future oil and natural gas prices and service
costs
|
●
|
Cash
flows, anticipated liquidity, and the future repayment of
debt
|
●
|
Business
strategies and other plans and objectives for future operations, including
plans for expansion and growth of operations or to defer capital
investment, and our outlook on our future financial condition or results
of operations
|
●
|
Other
similar matters such as those discussed in the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” section of
this Form 10-Q.
|
●
|
The
volatility and level of realized oil and natural gas
prices
|
●
|
A
contraction in demand for oil and natural gas as a result of adverse
general economic conditions
|
●
|
The
availability of economically attractive exploration, development, and
property acquisition opportunities and any necessary financing, including
constraints on the availability of opportunities and financing due to
currently distressed capital and credit market
conditions
|
●
|
Our
ability to replace reserves and sustain
production
|
●
|
Unexpected
drilling conditions and results
|
●
|
Unsuccessful
exploration and development
drilling
|
●
|
The
risks of hedging strategies, including the possibility of realizing lower
prices on oil and gas sales as a result of commodity price risk management
activities
|
●
|
The
uncertain nature of the expected benefits from acquisitions and
divestitures of oil and natural gas properties, including uncertainties in
evaluating oil and natural gas reserves of acquired properties and
associated potential liabilities
|
●
|
The
imprecise nature of oil and natural gas reserve
estimates
|
●
|
Uncertainties
inherent in projecting future rates of production from drilling activities
and acquisitions
|
●
|
Declines
in the values of our oil and natural gas properties resulting in
impairment charges and write-downs
|
●
|
The
ability of purchasers of production to pay for amounts
purchased
|
●
|
Drilling
and operating service availability
|
●
|
Uncertainties
in cash flow
|
●
|
The
financial strength of hedge contract counterparties and credit facility
participants, and the risk that one or more of these parties may not
satisfy their contractual
commitments
|
●
|
The
negative impact that lower oil and natural gas prices could have on our
ability to borrow and fund capital
expenditures
|
●
|
The
potential effects of increased levels of debt
financing
|
●
|
Our
ability to compete effectively against other independent and major oil and
natural gas companies and
|
●
|
Litigation,
environmental matters, the potential impact of government regulations, and
the use of management estimates.
|
(c)
|
The
following table provides information about purchases by the Company or any
“affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange
Act) during the fiscal quarter ended March 31, 2009, of shares of the
Company’s common stock, which is the sole class of equity securities
registered by the Company pursuant to Section 12 of the Exchange
Act.
|
Period
|
(a)
Total
Number
of
Shares
Purchased
(1)
(2)(3)(4)
|
(b)
Average
Price
Paid
per Share
|
(c)
Total
Number
of
Shares
Purchased
as
Part
of Publicly Announced Program
|
(d)
Maximum
Number
of
Shares
that May
Yet
Be
Purchased
Under the Program (5)
|
|
01/01/09
–
01/31/09
|
747 | $ | 20.29 |
-0-
|
3,072,184
|
02/01/09
–
02/28/09
|
53,200 | $ | 13.62 |
-0-
|
3,072,184
|
03/01/09
–
03/31/09
|
4,741 | $ | 12.28 |
-0-
|
3,072,184
|
Total:
|
58,688 | $ | 13.60 |
-0-
|
3,072,184
|
Exhibit
|
Description
|
10.1
|
Third
Amended and Restated Credit Agreement dated April 14, 2009 among
St. Mary Land & Exploration Company, Wachovia Bank, National
Association, as Administrative Agent, and the Lenders party thereto (filed
as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on
April 20, 2009, and incorporated herein by
reference)
|
10.2
|
Supplement
and Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement for
the benefit of Wachovia Bank, National Association, as Administrative
Agent, dated effective as of April 14, 2009 (filed as Exhibit
10.2 to the registrant’s Current Report on Form 8-K filed on
April 20, 2009, and incorporated herein by
reference)
|
10.3
|
Deed
of Trust to Wachovia Bank, National Association, as Administrative Agent,
dated effective as of April 14, 2009 (filed as Exhibit 10.3 to
the registrant’s Current Report on Form 8-K filed on
April 20, 2009, and incorporated herein by
reference)
|
31.1*
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley
Act of 2002
|
31.2*
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley
Act of 2002
|
32.1** |
Certification
pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes – Oxley Act of
2002
|
May
4, 2009
|
By:
|
/s/ ANTHONY J.
BEST
|
Anthony
J. Best
|
||
President
and Chief Executive Officer
|
||
May
4, 2009
|
By:
|
/s/ A. WADE
PURSELL
|
A.
Wade Pursell
|
||
Executive
Vice President and Chief Financial
|
||
Officer
|
||
May
4, 2009
|
By:
|
/s/ MARK T.
SOLOMON
|
Mark
T. Solomon
|
||
Controller
|